Dating back to the Great Depression, when foreclosures and default rates rose very quickly, the U.S. Federal Housing Administration began insuring and subsidizing lenders in order to allow them to offer home loans to families that would not otherwise be able to afford them. According to the wiki: “To obtain mortgage insurance from the Federal Housing Administration, an upfrontmortgage insurance premium (UFMIP) equal to 1.75 percent of the base loan amount at closing is required, and is normally financed into the total loan amount by the lender and paid to FHA on the borrower’s behalf. There is also a monthly mortgage insurance premium (MIP) which varies based on the amortization term and loan-to-value ratio.”
The team at Mortgage Maestro is well-versed in FHA loan practices. Schedule a consult and let us help you become a homeowner!